A price movement in a security or market that is counter to a previous trend. For example, in rising market, a 25 percent retracement would indicate a price decline equal to 25 percent of the previous advance.

A decline that retraces a portion of a previous advance, or an advance that retraces a portion of a previous decline. Retracements typically cover 1/3 to 2/3 of the previous move, and a retracement of more than 2/3 typically signals a trend reversal.